AGP has reported 4QCY21 NPAT of PKR450mn (EPS: PKR1.61), up 8% yoy and a sharp 32% qoq. This takes CY21 NPAT to PKR1.6bn (EPS: PKR5.59), flat yoy. While the 4Q result is better than expected, we attribute this growth to one-off reversal of PKR34mn on finance cost – without which this would have been a weak result. Trade disruptions and border closure in Afghanistan have led to a sharp 24% yoy drop in sales. Recently acquired Sandoz Pakistan has helped fill the gap in sales. Results were accompanied with a final cash dividend of PKR2.5/sh.

4QCY21 Key result highlights:

AGP’s revenue has dropped to PKR1.5bn in 4QCY21, down 24% yoy and 35% qoq. Absence of sales to Afghanistan and lower institutional sales orders are to blame. Revenue from Sandoz Pakistan however remains on track, helping plug the gap.

AGP has posted gross margins of 63%, likely led by Sandoz and sale of high-margin products. AGP has not witnessed any meaningful exchange rate volatility due to strong inventory buildup, as expected.

SG&A expenses have come off by 27% yoy in line with the decline in sales. Finance costs, on the other hand, have reported a reversal of PKR34mn vs. PKR30mn expense SPLY. This has helped support the bottom-line. AGP has also reported a PKR11mn loss on its other income. We await management guidance on this front.

While this is a weak result by AGP, the impact of suspended Afghanistan operations appears to be largely in the price (AGP’s stock price is down 27% in the last 12 months). Earnings from Sandoz Pakistan remain on track and can only rise from here. We have a TP of PKR105/sh on the stock.